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The basics of risk management

accountant37004036.jpgOne of the most important job responsibilities of a manager is learning the basics of risk management. Risk management entails a number of things like planning for risk, controlling risk, risk triggers, and risk combination. While most people think specifically of workplace accidents when they talk about risk management, there are other areas of risk management that you may not be familiar with. Risk management also encompasses sales, marketing, and hiring the right employees.

Lets start with some of the basic principles that make up a business, your employees, Without the right employees you will be unable to run a successful business. Employees are in charge of face to face interaction with your customers and they need to be thoroughly trained in order to foster meaningful relationships with your customers. Hiring the right employees in the first place will also save you a ton of time. To hire the right employees, write out several job descriptions for them that clearly explain their role within the company. During the job interview, be sure to ask them every question you can think of that will help you know if they are completely qualified for the job. Find out their weaknesses and other problems that they have had in the past so you know where to begin to train them after you hire them. No employee should be perfect and you should expect some flaws with all of the positive attributes they bring to the company.

Projects are another big part of risk management. Projects refer to not only the individual job responsibilities you have but to the overall group project. Before you assign projects to your employees, you have a responsibility to assess the outcome of the project to determine the risks of it. Can you afford to place as many people on the project as you like? Do you have all the resources you need to fund the project? How long will the project last? Some of the projects you assign to your employees may last only a few months while others will take years to complete.

Risk management also entails working with vendors. How much money are your vendors charging you for your supplies? Working with vendors is a risk because they can quickly cut off your supply to the materials you need to run your business properly. The other thing you need to worry about is the actual cost of the materials. It's important to your business to get continual updates from different vendors to make sure you are getting fair prices on your materials. When you work with the same vendors for several years, they can go one or two ways. One way they can go is to stop offering you good prices. A lot of vendors simply assume that you will remain a client no matter what so they don't have to keep giving you good deals. The other way a vendor can go is to offer you great prices because they know the value of your business. Even though you may be a small business owner, you can still be a driving force for their business as you start to build a solid reputation.

Then of course the biggest part of risk management comes down to your ability to prepare for accidents. Do you have the right type of insurance that will protect your business if one of your employees is injured on the job? What are you doing to prevent workplace accidents from happening? It is important for you to implement some sort of safety regulations if you want to stay in business for the long haul and to bring on good employees.

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Posted by DF
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